Contractor sees half-year turnover and profit rise
Costain is targeting 5% margins in the long run, its chief executive has said, as the firm improved interim turnover and profits.
The infrastructure specialist, which returned to the FTSE 250 index after an absence of more than 20 years, said income in the six months to June was up 3% to £543m with pre-tax profit rising 5.5% to £19m.
Alex Vaughan said the contractor has a medium-term target of operating margins above 5% – although he declined to put a date on when this will happen.
Interim operating margins were 3.2% with the firm aiming to get this figure up to 4.5% in the next few years.
Vaughan, who was a signatory to last month’s open letter from the industry to new prime minister Andy Burnham telling him not to rip up the government’s 10 year infrastructure plan, said: “It’s an exciting time for infrastructure. There is a lot going on and we [as a country] need to get on with things.”
Costain is one of several contractors negotiating with HS2 over the reset of contracts ordered by the railway’s chief executive Mark Wild.
Vaughan said the discussions were ongoing and were not about contractors agreeing to do the work for less money. “It’s about being more efficient.”
The firm is part of a consortium tunnelling from Old Oak Common to Euston with the job expected to take five years to complete. “Clearly the government is very committed to a station [at Euston] – that’s why we’re driving two tunnels there.”
Costain said it was doubling its interim dividend to 2p with its net cash balance up 13% to £164m during the period. Its forward order book was up a quarter to £7bn.
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